The words “cost-of-living” and “inflation” were everywhere in the news last year in Western Europe, and it felt like only ChatGPT helped the media talk about a different topic. It’s true that inflation came very suddenly and took young Europeans by surprise: YPulse’s research found that four in five young people in Western Europe agree with the statement “I did not expect the cost-of-living to increase as much as it did last year.”
YPulse constantly keeps track of the what, how, and why of Gen Z and Millennials’ lives and views through our monthly behavioral surveys, and comparisons of year-on-year data. But YPulse also constantly adds questions based on what’s going on in the world currently, to better understand how they’re reacting to real-time events. We’ve done just that for our latest WE Finance / Spending Monitor Report, and introduced questions to understand how young consumers are coping with inflation, including how many European Gen Z and Millennials have seen their bills increase in the last year:
Almost all young Europeans who are paying bills have seen them increase last year due to the cost-of-living crisis
More than four in five European Gen Z and Millennials have seen an increase in their bills in the last year due to inflation, meaning the cost-of-living crisis impacted virtually all young Europeans who are of age to pay bills. And the feeling was shared among young consumers in all five countries in Western Europe, who overwhelmingly say they’ve noticed an increase, with those in Spain most likely to say they’ve seen an increase, while young German consumers were less likely to report a rise (79%). Governments in the region have tried as much as possible to help their citizens with the situation; in Spain, for example, people were able to receive a €200 subsidy to help with rising costs. In the U.K., where electricity prices went up more than 66% in 2022, and gas increased 129%, the government decided to offer a £400 discount on energy bills.
With bills going up, how have young consumers changed their spending behaviors to adapt to inflation? We asked young Europeans to tell us what the top things they’ve changed because of inflation in the last year are—as an open-end question*—and here’s what they had to say:
The top thing they’ve changed about their spending because of inflation in the last year
Among 13-39-year-olds in WE
- Reduce food consumption / expenditure
- Reduce expenditures on entertainment / leisure activities
- Spending money on cheaper / lower-quality options
- Spend less overall
- Buy less clothes / makeup / other personal items
- Control energy / utility consumption
- It has not changed their spending habits / behavior
- Reduce dining / takeaways from restaurants
- Reduce expenditures on non-essentials
- Pay more attention to the price of items
Cutting down on food costs is the top thing young Europeans have done to save
When asked what things they changed about their spending to fight inflation, young Europeans’ top answer is to reduce food consumption and expenses. Cutting on such an important essential as food reveals how vulnerable young consumers in the region are, and how impacted they’ve been by the cost-of-living crisis. There are worrying reports of European Gen Z and Millennials going hungry, especially students. For example, a recent survey by the charity Co’p1-Solidarités étudiantes found that 56% of students in France do not eat as much as they would like to. The French government even considered offering one Euro meals to all students in the country, but the bill failed to go through Parliament.
The cost-of-living crisis has impacted the living standards and spending habits of young Europeans, making poverty / homelessness / hunger a bigger social cause compared to last year; and moving it to the top three social causes 13-39-year-olds are most passionate about. The impact inflation had on young people is leaving many in this region choosing between “heat or eat,” leading to an increase in news coverage of youth homelessness, and European cities are implementing solutions to curb the issues while creating further demand for food banks, and impacting more than their finances.
Brands wanting to offer cheaper products to young Europeans need to be aware of the risk of “poverty shaming.” ASDA learned the lesson the hard way when it revamped its cheaper range of products last summer. To catch the attention of increasingly price-conscious consumers, ASDA decided to create a bright yellow package for its cheapest products—a design used in times of high inflation in the ‘70s. Unexpectedly, the revamp met a huge backlash among ASDA consumers, who felt embarrassed about the yellow labels showing up in their carts. This failed campaign shows that brands should navigate marketing around discounted or cheaper products with caution, even in times of cost-of-living crisis.
These consumers are also looking closely at their entertainment bills
The second top thing young consumers in Western Europe have done in response to the cost-of-living crisis is to reduce their spending on entertainment / leisure activities. When high inflation hits, consumers scrutinize their budgets and re-evaluate all their monthly subscriptions. This is exactly what happened to the streaming industry last year, which relies on monthly subscriptions: in the U.K. alone, an estimated 2 million consumers have canceled their subscriptions to streaming services in 2022. Netflix reacted with the introduction of a cheaper “basic” service, a subscription package that includes four to five minutes of ads per hour. Netflix also started charging users who are sharing their accounts / passwords as a way to increase revenues when many people canceled their accounts.
That being said, Netflix remains a favourite of European Gen Z and Millennials, and data from YPulse’s WE Media Consumption Report shows that Netflix is still their main source of entertainment. This gen loves their streaming entertainment, and Netflix is by far the streamer they prefer: when we asked “If you could only watch content on one of these platforms for the rest of the year, which would it be?” over a third say Netflix would be their choice, far, far more than any other source. So while they may be cutting back, it’s a fair guess that when they have the extra funds again many will be signing back on.
Looking for cheaper options like dupes is a long-term trend among young Europeans that will impact brands in the future
The third thing young Europeans are most likely to have done to adapt their spending is to look for cheaper options. For example, many consumers have ditched organic food last year because of the extra cost to buy such products. But cheaper options are not limited to the aisles of supermarkets, brands in every industry must realize that young consumers looking for cheaper options is a long-term trend that will likely remain beyond the current cost-of-living crisis.
YPulse informed you that dupes are this year’s biggest shopping trend so far, and it makes sense considering the current savings priorities of young consumers in Western Europe. Largely thanks to the TikTok trend, young consumers have been obsessed with finding dupes (duplicates) of cheaper versions of well-loved, but expensive products. Finds rack up millions of views on the app—the hashtag #Dupes has been viewed more than 418M times on the platform in the five Western European countries YPulse surveys (U.K., France, Germany, Spain, Italy). Data from our WE Luxury report also shows that over half (51%) of Gen Z and Millennials have purchased a dupe or fake luxury item. Any brand should consider if their products could be seen as a dupe of something more pricey. Cheaper options like dupes are here to stay, and young consumers are likely to fuel the trend for the years to come.
*This was an open-end response question to allow us to capture the full range of spending habits that Millennials and Gen Z have changed—without our preconceived ideas shaping their responses. As with any qualitative question, the responses include those that are top of mind and those that are most popular. The lists are ordered according to the number of responses received, and alphabetically when ties occurred.
